All Articles Finance GlobalCollateral rolls out solution to optimize US-Europe collateral

GlobalCollateral rolls out solution to optimize US-Europe collateral

Depository Trust & Clearing Corporation and Euroclear collaborate to unveil solution to optimize US-Europe collateral

3 min read


As a market participant, have you ever wanted to tap US scurities to meet collateral needs in Europe? Or how about vice versa?

GlobalCollateral, a joint venture of Depository Trust & Clearing Corporation and Euroclear, is rolling out its new Inventory Management Service, a service that make it possible to readily access both US and European securities for use as collateral. Users of IMS will be able to leverage a combined $78 trillion in assets between these markets.

The introduction of cross-border collateral mobility by GlobalCollateral will bring new levels of visibility and efficiency to complex and fragmented collateral management systems. Collateral options for users include Depository Trust Company-eligible equities in the US, in addition to corporate bonds and asset-backed securities within Euroclear. With IMS, dealers can readily deploy assets to satisfy global collateral needs regardless of the collateral’s source or asset class. 

“This is a major step for GlobalCollateral,” said Michael Shipton, GlobalCollateral CEO. “IMS delivers one of the joint venture’s key objectives – to address what market practitioners have long recognized as a critical need to be able to directly mobilize and use collateral across borders and to move dollar assets into Europe. With IMS, firms have greater control and flexibility in the way they utilize their assets, while benefiting from improved efficiency.”

In a conversation on the sidelines of FIA’s International Futures Industry Conference in Boca Raton, Fla, Gareth Jones, COO of DTCC Euroclear Global Collateral, explained the importance of the development for market participants.

“The problem in the past has been that there is all this liquidity in the pipes of the market, but the pipes couldn’t move that liquidity to where it was needed. This solves that problem., Jones said.

Depository Trust & Clearing Corporation and Euroclear’s deep collaboration on IMS bring to bear the resources of two leading Central Securities Depositories. This marks a significant step toward the goal of creating global collateral flows that address liquidity, regulatory and risk challenges.

Jones said IMS is impervious to any Brexit concerns, noting that the functionality is built to manage all manner of cross-border conerns.

“The launch of IMS demonstrates what we, as an industry, can achieve when we collaborate with each other,” said GlobalCollateral executive chairman Mark Jennis. “The scale of collaboration required to deliver IMS – not just between DTCC and Euroclear, but also with the firms in our Market Advisory Group, has been outstanding. As the demand for high-quality collateral continues to grow, IMS provides critical access to new collateral pools.”